Building Safety Act update – Building Liability Orders (BLOs), Remediation Contribution Orders (RCOs) and Remediation Orders (ROs). What you need to know.

Following the announcement that the Grenfell Tower would be deconstructed almost eight years after the tragedy, that brought the matter of fire safety in high residential buildings to the forefront of the Government’s agenda, building safety is (as it should be) in the front of property peoples’ minds.

Last week we commented on several things to keep a look out for in 2025, connected to the Building Safety Act 2022 (the BSA). You can read that article here.

However, there have been two key BSA decisions in the last couple of months which provide some further guidance on Building Liability Orders (BLOs),  Remediation Contribution Orders (RCOs) and Remediation Orders (ROs).

By way of a recap – what are BLOs, RCOs and ROs?

• BLOs were introduced under the BSA as a means of extending liability for unsafe or defective premises beyond the immediate developer or landlord company. This ensures that corporate structures can’t be used to escape liability (for example, by using a special purpose vehicle with no other assets)
• BLOs can be granted by the High Court to extend “relevant liabilities” relating to building safety defects for one company to other companies associated with that company. The effect is to make the companies jointly and severally liable for the defects.  The High Court can do this if it’s considered “just and equitable”
• Similarly, the BSA includes a regime relating to RCOs as a means of protecting leaseholders from the costs of repairing historical building safety defects. They require a specified body corporate or partnership to meet remediation costs if it is just and equitable to do so. There is also a regime relating to ROs which order that a “relevant landlord” must remedy a “relevant defect” (building safety defects) in a “relevant building” i.e. a building that is at least 11 meters high or has at least five storeys and contains at least two separate dwellings.

Two key decisions

1. Vista Tower, Stevenage (Tribunal case reference CAM/26UH/HYI/2023/0003) – the “big bill case”

The First-tier Tribunal (FtT) ordered 76 companies to jointly and severally contribute over £13.2m towards the remediation of fire safety defects. This case is significant as it clarifies the application of the “just and equitable” test for RCOs. It also clarifies that a “defect” could include issues that may not breach building safety regulations.

Facts

Vista Tower is a 16-storey building, originally built in the 1960s as office space, which was converted to flats in around 2015.

The applicant was the freeholder of the building at the time of the claim.  On 2 November 2022, the Secretary of State applied to the FTtT for a RO against the Applicant due to building safety risks in the building.  The applicant applied to the FtT for a RCO against the first respondent to the claim – the company that originally commissioned the conversion of the building to flats.

In addition, there were 95 (!) further respondents to the claim – a claim was made for a RCO against numerous of the others by association with the first respondent/the original developer.

The case was significant for the following reasons:

• Just and equitable – The FtT decided to make a RCO against over 70 of the respondents on a joint and several basis because the respondents were associated with the original developer through common directorships, and other links. In addition, the FtT concluded that it was “just and equitable” to make all respondents subject to the RCO responsible as the complex relationship between the respondents couldn’t be explained in order to justify not making them jointly liable
• The FtT considered that the “just and equitable” concept was deliberately wide ‘so that the money can be found’. The FtT suggested that the main purpose of the legislation is to ensure that the ‘pot is filled promptly’ so that remedial work can be carried out where it is just and equitable to do so.  It confirms the approach in the earlier Triathlon case where the developer is at the top of the “hierarchy of liability” and there is a “waterfall effect” of cascading liability falling down on other parties
• Relevant defect – The FtT dismissed an argument that a “relevant defect” was limited to building work that did not comply with building regulations, and instead concluded that non-compliance with building regulations is merely one way (but not the only way) in which something can be a “defect” for these purposes.

All of the above emphasise an approach that developers and those associated with developers, even just by virtue of common directors, are to be responsible for remedying a very broad range of possible building safety defects, especially if the associated entities are able to pay.

2. 381 Southwark Park Road RTM Company Ltd v Click St Andrews – the big BLO case with the first finding of relevant liability

The Technology and Construction Court (TCC) handed down the first High Court finding of a “relevant liability” which will allow a BLO to be sought on the basis of a “building safety risk”.  The case also gives some guidance on how the new section 2A of the Defective Premises Act 1972 (DPA) will be applied.

Facts

The claimants, a right-to-manage (RTM) company and residential leaseholders of an apartment block, pursued both the previous (special purchase vehicle) owner of a residential property and its parent company in the TCC.

The RTM company had entered into a contract with the previous owner, under which the previous owner agreed to carry out work adding an additional storey to the block.  At the time of the case, the RTM company owned the block and the leaseholders owned flats in the block.

Structural and fire safety defects were discovered in the works.  The RTM company and leaseholders were awarded damages in respect of breaches of the contract relating to the works and other civil liabilities and liability for a BLO was found. However, their claim under s2A of the DPA failed.

The case is significant for the following reasons:

• It was suggested that it was correct to characterise a failure to comply with design standards concerned with structural safety as a “relevant liability” and therefore grounds for a BLO, notwithstanding that the risk caused by that failure had not actually manifested itself, may not ever manifest itself, and was capable of being addressed. It was noted that this was the “nature of risk” and that this “is what the ‘relevant liability’ for a BLO is concerned with”
• The judge decided to determine if there was a liability which was a “relevant liability” for the purposes of a BLO and therefore if the claimants would be entitled to a BLO. The judge left the claimants to apply for a BLO at a later date, if they so wished.   Why?  Because the judge determined as a practical point, that it may be just and equitable to make a BLO in the future, after proceedings to establish a relevant liability are concluded, and as a BLO could be sought against a corporate body that did not even exist at the time of those proceedings!
• Section 2A of the DPA – Section 2A was inserted into the DPA by the BSA. Section 2A applies where a person, in the course of a business, takes on work in relation to any part of a building consisting of or containing one or more dwellings.  It places a duty on the person taking on the work to ensure that it is carried out in a workmanlike or (as the case may be) professional manner, with proper materials and so that the dwelling is fit for habitation when the work is complete.  Section 2A has a limitation period which means that it only applies for 15 years for any works completed on or after 28 June 2022.  The claim alleged breach of section 2A.The TCC could not identify any works that were done on or after 28 June 2022 and so there could be no breach of section 2A.

It appears that a BLO may now have been made in this case which will make it the first one under the BSA – we will report further on this once we know more.

Conclusion

As the BSA beds in further we will almost certainly see many more fundamental decisions like these over the coming months.

If you require further information in respect of the BSA, please do not hesitate to contact us.